ADM 3391 Exam 2

Markup (MU$)

Retail − Cost

Markup % (MU%)

(Retail − Cost) ÷ Retail

Cost formula

Retail × (1 − MU%)

Retail

Selling price (ticket price)

Cost

Price retailer pays for goods

Initial Markup (IMU)

Original markup before any markdowns

Maintained Markup

Final markup after markdowns

Markdown (MD$)

Reduction from original retail price

MD$

Original retail × % off

Total Markdown $

Units sold × MD$

Total Sales $

Units sold × Original retail

Markdown %

Total MD$ ÷ Total Sales $

Promotional Markdown

Temporary price cut (does NOT permanently change retail)

Permanent Markdown

Price is permanently reduced

Private Label Merchandise

Retailer-owned brand (store brand)

FOB (Free on Board)

Determines ownership in transit and who pays freight

FOB Shipping Point (FOB Factory)

Buyer owns goods when shipped and pays freight

FOB Destination (FOB Store)

Seller owns goods until arrival and pays freight

ROG Dating

Payment begins when goods are received

EOM Dating

Payment due after end of invoice month

Net Terms (4/8, N30)

4% discount if paid in 8 days; full amount due in 30 days

Cash Discount

Price reduction for early payment

% Sales by Month

Monthly sales ÷ Season sales

Markdown Rate

Monthly markdowns ÷ Monthly sales

Stock-to-Sales Ratio

BOM stock ÷ Monthly sales

Average Stock

(Sum of all BOMs + Jan EOM) ÷ 7

Turnover

Season sales ÷ Average stock

Total Stock

BOM stock + Purchases

Total Deductions

Sales + Markdowns

Purchases

(EOM stock + Total deductions) − BOM stock

Overage

Physical inventory is higher than book inventory

Shortage

Physical inventory is lower than book inventory

Gross Sales (GS)

Total sales before deductions

Returns & Allowances (R&A)

Reductions from gross sales

Net Sales (NS)

Gross Sales − Returns & Allowances (THIS = 100%)

Cost of Goods Sold (COGS)

Cost of merchandise sold

Direct Expenses

Expenses directly tied to selling

Indirect Expenses

General operating expenses (rent, utilities)

Profit/Loss

Final result after all expenses